Cairn Energy told investors last week that it would start a third round of exploration drilling in Senegal which it said could contain as much as 27mn barrels of oil. It has already delivered six successful wells in the West African nation. The update pushed Cairns Energy's share price up three per cent to 248.4p.

Tullow Oil have also had positive market reaction after releasing news of its new oil discovery north of the South Lokichar basin in Kenya. The share price of Tullow Oil increased by 1.5 per cent before settling at 313p.

Angus McCoss, exploration director at Tullow, said, "The roughly 100-ft column proved that oil had migrated into the area and further drilling would now go ahead."

With the drop of oil price came a severe cut back in spending by oil companies. With expectation of the oil price to rise from the current US$55 a barrell to between US$60 and US$65 a barrell comes increased spending, investment and market confidence.